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Tim Hudak’s LCBO plan fails breathalyzer test

With Ontario trying to cut its $14-bilion deficit, why pour $1.66 billion in annual liquor revenue down the drain?

The LCBO is one of the largest purchasers of booze in the world, giving Ontarians the benefits of great variety and good prices. (July 12, 2002) (Toronto Star file photo)

By Trish Hennessy

Wed., Dec. 5, 2012

If your province grappled with a $14-billion deficit, would you turn away $1.66 billion in guaranteed annual revenues to help pay the bills?

Of course you wouldn’t. But Tim Hudak, the leader of Ontario’s Progressive Conservative party, is proposing just that. He’s been busy reviving a number of dead horses from the Mike Harris era, including a proposal to put liquor sales in private hands.

Alberta really is the poster child for not privatizing liquor in this country: Since putting booze sales in private hands in 1993, Alberta has forgone nearly $1.5 billion in tax revenue.

Ontario would have far more to lose. Nearly $13 billion in LCBO dividends has gone to the province over the past decade. It doesn’t make sense for the Ontario government to give up such a healthy stream of revenue — especially while it’s paying down the deficit it incurred due in large part to the global recession.

But even during good economic times, why would any government walk away from a revenue stream unless its true intention is to “shrink government to the size where you can drown it in a bathtub,” as American Grover Norquist famously quipped.

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Then there’s the financial impact on Joe Sixpack. The Canadian Centre for Policy Alternatives (CCPA) Saskatchewan office recently released a study comparing prices for 13 beer, wine and spirits products in three western provinces.

Guess which stores jacked up the cost of booze? The private stores, where profit seeking is naturally the bottom line. Prices are steepest in Alberta and B.C. private stores but they’re more affordable in Saskatchewan and B.C. public stores.

Ontario’s LCBO is one of the largest purchasers of booze in the world. Ontarians benefit from that purchasing power: We get better prices, wider variety and the comfort of knowing profits from sales contribute to vital public services.

Privatizing booze and taxing the sales, as Hudak proposes, could mean higher prices. And since the LCBO’s mandate includes promoting Ontario wines and craft beer, variety could diminish in a private system.

As Ottawa columnist Ken Gray has written: “Frankly, it doesn’t matter if the government is in the liquor industry or not because, someone, private or public, will do it. What is important is that Ontarians receive the best service at the lowest cost in any endeavour. And surprisingly in a world where government enterprise tends to be rather inefficient, the LCBO does a pretty good job.”

It isn’t just about the money. There are also social and health reasons for maintaining public control over liquor sales.

When it comes to selling booze to minors or drunk customers, for instance, the CCPA Saskatchewan study shows public stores in B.C. are twice more likely than private stores to do the right thing by turning away the customer.

That study also notes that after the 1993 decision to privatize liquor sales in Alberta, Edmonton police reported double the number of offences for minors in possession of alcohol. An earlier CCPA study noted that 10 years after Alberta privatized its liquor sales, that province had the second highest drunk driving rate in Canada.

Supporters of privatization often try to win us over with the promise of wine and beer readily accessible at corner stores. But there is a downside: The Centre for Addictions Research for British Columbia reported that between 2003 and 2008, an increase in private liquor stores was correlated with a rise in alcohol-related deaths.

It’s the kind of thing that matters to Mothers Against Drunk Driving (MADD), which points to research from the World Health Organization, Canada’s National Alcohol Strategy and the Centre for Mental Addiction and Health that recognizes the role government can play in mitigating social harm.

That’s what governments are supposed to do: ensure the profit-seeking interests of private companies don’t take precedence over public health and safety. Keeping the LCBO in public hands means it’s the public that decides whether having more liquor stores is a good idea or not.

Finally, even Mike Harris — who was so keen on privatization in the 1990s he would have probably sold the flooring in the provincial legislature if it wasn’t nailed down — didn’t do it.

It wasn’t a good deal for Ontario at that time and for a variety of reasons, including fiscal and social ones, it still isn’t.

Trish Hennessy is director of the Canadian Centre for Policy Alternatives’ Ontario office.

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